Today on the Shared Services & Outsourcing Network (SSON) Thursday, January 12, 2012 http://www.ssonetwork.com/building-and-sustaining-continuous-improvement-program/14272-6-A Building and Sustaining a Continuous Improvement Program. What are the secrets to an effective continual improvement program? One that not only gets results quickly, but also stands the test of time? The key lies in how you develop and position the program, as well as in employing easy‐to‐use and repeatable techniques that get results quickly. Here is an implementer’s and a consultant’s perspective on what actually works – in principle and in practice. By Andrew Muras, Sr. Manager, BAE Systems and Deborah Meyers, CA, CFO, Calgary Board of Education Introduction How’s it working for you? Here’s a challenge – find a strategic plan or business model that doesn’t mention process improvement or transforming the organization. Lots of luck. Successful businesses and organizations pride themselves on finding ways to do things better. For all the emphasis on process improvement, how have we done in practice? Consider these excerpts from a McKinsey study: [Improvement] savings are often fleeting…by year four fully 90 percent of costs are right back where they started. … Sweeping, top‐down cuts…can unintentionally lower the effectiveness of back‐office services. ... To capitalize on the potential for improvement and make changes stick, executives must also consider effectiveness…[and] probe the root causes of performance deficits to learn where lean and other process‐improvement techniques might be advantageous. “Why Don’t Back‐Office Efficiency Drives Stick?” Jan 2010, McKinsey Quarterly But surely this isn’t the case with tried and true initiatives such as Lean or Six Sigma? Well, read these recent comments from the president of the Center for Excellence in Operations: Benchmarks indicate that over 80% of Lean & Six Sigma deployments are unsuccessful, following the same trend of improvement programs over the past three decades. … The present approaches to Lean Six Sigma and strategic improvement in general are too slow, too overhead intensive and ineffective at achieving quicker results. … Training the masses and Belts is the wrong approach in the new economy. …Over ¾’s of individuals certified as Black Belts are no longer involved in formal improvement initiatives. Terence Burton “Put the ‘continuous’ back in improvement,” Six Sigma and Process Excellence, Jan 2011 A recent webinar polled a group of shared services leaders and>80% stated they do continuous process improvement; only10% were very satisfied with results, 50% were somewhatsatisfied and the rest were dissatisfied.
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organization ‐ vision and goals, and products and services, respectively. Doing the right thing well concerns the “How” of an organization ‐ continuous improvement. An organization must have coordinated strategies to address both perspectives. There isn’t much value in effectively delivering the wrong product/service. 2. Is Continuous Improvement an Initiative or a Culture? Viewing CI efforts as a strategy to change organizational culture will go much farther than mandating change as a project. A project has a beginning and an end and is contrary to the concept of “continuous.” Instead, focus on injecting CI into the organization’s work culture as a pro‐active tactic, rather than viewing improvement as a reactionary tactic. This can be accomplished directly by: using “Train the Trainer” approaches that transfer CI knowledge and tools in‐ house developing simple and repeatable CI processes that can be injected into the organization’s annual management process 3. Do you subscribe to the “Big Bang Theory”? Big Bang (i.e. transformational or “breakthrough,”) change can produce dramatic results, especially if the change is made by a single or a few individuals. However, if it requires the sustained involvement of a large number of people, then Big Bang change may be difficult to sustain. Consider what happens when improvement is mandated and enforced by a single individual and that individual leaves. Does the change carry‐on, or does it die, with things reverting back to the old ways? Typically the latter. While incremental change may be less dramatic, if it is carried out by many people over time, it has a far greater chance of lasting success. An incremental approach, leveraged by a culture of CI, will typically outperform discreet, major change because: There is no incentive for implementation delays while folks figure out the “very best way.” Big Bang change means long periods between change windows. With continuous attention to change, improvement windows are frequent, so there is room to proceed with interim steps Continuous change provides agility and the opportunity to try creative solutions at reasonable risk levels. Failure doesn’t result in massive expenses if you choose a solution that ultimately doesn’t work The quick feedback loops required in continuous improvement processes inform the next improvement, ultimately improving overall results far more efficiently than feedback loops on breakthrough projects with long periods between change windows Discrete responses for improvement foster a false sense of stability – implying that you can hold things constant until it is time to change again. Such an attitude is unrealistic in today’s fast‐paced environment. I equate continuous change with taking baby steps and learning to walk before you run. 4. Is CI a body of work or is it embodied within the work? CI as a body of work is often seen as a separate function with its own objectives and business plan. If it is embodied within the work of the organization, then every area has a CI aspect to it. Two dimensions you need to consider: Do you hire consultants to do all the work, or do you involve your own people? While external reviews have their place, they will not contribute to establishing CI within your organization, unless the consultants are required to pass on their techniques. Staff empowerment and engagement are key to CI’s success. Do you set up a CI Department within your organization structure? On the positive side, identifying CI within the organizational structure signals its importance and demonstrates commitment. As a separate department, it will have business plans that demonstrate
measurable strategies to meet its goals. On the downside, it may imply that CI is a specialty, requiring distinct skills, and even more problematic, that CI is the responsibility of that department only. Successful CI rests in a culture where every employee is accountable for constantly seeking to improve how their work is performed, adding value, and contributing to the successful achievement of the organization’s goals. All you need do is give them the time, techniques and tools to make it happen. If you plan to establish a CI Department, focus its objectives on training staff in CI skills and techniques and developing repeatable processes for use throughout the organization, rather than solely performing CI reviews themselves. 5. Specialist “hard” skills versus “soft” skills? While CI is often perceived as requiring special “hard” skills, I suggest that it requires a balance of both ”hard” and “soft” skills. “Soft skills” are traditionally those people skills or behavioral competencies having to do with how people relate to each other and manage relationships. CI involves managing how our work relates to the work of others, the quality and value of our work, and the contribution we make to meeting our customers’ needs. Even though CI focuses on “process to process” relationships, soft skills still play a key role. Examples of the soft skills that support successful CI are: openness to change, questioning the status quo and creative thinking. While CI techniques and tools (i.e., “hard” skills) are important, I believe it is behavioral competencies that make a difference. If staff do not have a “CI state of mind” and the related soft skills, having the CI tool kit will be pointless. A tool kit is an important component of proficiency, but only to the extent that it supports staff in looking at their work from a CI perspective. 6. Are cost and performance separable? Private sector organizations have a strong focus on the relationship between cost and performance, typically with lots of data and metrics. The cost‐performance relationship is instrumental to operational success, thereby increasing the importance of budgets and costs to all managers. In the public sector, the relationship of cost and performance is usually weaker. Work is often not considered a business, but rather a public service and therefore you can expect some resistance as you introduce the business concepts inherent in CI. I am certainly not saying that public servants aren’t concerned with costs and performance, but it is important to ensure that understanding cost is seen as every manager’s responsibility. The communication strategies will be different for each environment. Regardless of public or private sector focus, cost and performance should be linked for effective CI implementation in improving value. Getting the organization to look at value in such terms might seem straight forward, but very often people have never included the impact of processes and productivity in their value equation. The notion that value can be impacted by either cost or performance (including both quality and productivity) and the importance of understanding costs may be a significant shift for those traditionally concentrating solely on service. This may require focused communication and even careful use of terminology. The above six points summarize key strategic decisions that you need to consider when implementing CI within your organization. Once you have dealt with these, here are some of the major tactics I have found that work best: Ensure that you have CEO sponsorship and support and actively leverage this. Use a “train the trainer” approach. Engage external consultants to provide training to an internal team. The internal team is temporary and its objective is to transfer the knowledge and techniques to the rest of the organization.
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Why is it so important to have a clear definition of NVA? Easy. The first time you show results that quantify x% of a process or budget as NVA, management immediately wants to cut the budget by that amount. However, this is not what NVA means. Instead NVA points to opportunities for improvement. Before any budget modifications can be considered, some type of change or improvement must be implemented. FastTracking for Continuous Improvement The triangle (or tetrahedron) of practices identified previously (ABM, Lean, Six Sigma, KM) are all useful for evaluating and improving organizational processes. However, I often find myself leading with ABM, particularly for shared services. Why? Simple. Most shared services issues and initiatives seem to involve cost (cost reduction, pricing and chargebacks, service catalogues, etc), and ABM excels at quantifying costs and linking budgets with processes and organizational initiatives. The FastTrack approach we use incorporates elements of ABM, Lean and Six Sigma (and lays the groundwork for KM) and has a twenty year history of success. FastTrack itself won’t be described here, but rather the principles that have made it successful. For those wanting additional detail on the actual FastTrack process, plus dozens of published case studies and the free web tool, go to www.fasttrackabm.com. FastTrack’s principles of success are centered on speed, simplicity, ease‐of‐use, repeatability and involving the people who do the work. Specifically, six tenets, all of which support and reinforce adult learning and engagement, include: Get results quickly. The entire FastTrack process and reporting period is complete within one to two weeks. Use workshops for employee engagement and building group consensus. FastTrack uses a series of 3 hour sessions with those who perform the work (i.e., not necessarily the managers) to develop the data and recommendations. Include train‐the‐trainer techniques to build internal expertise. Encourage knowledge transfer from the experts to those who will be continuing the work of process improvement. Focus on actionable results. Data and recommendations should be easy to understand and provide a straightforward implementation path. Incorporate adult learning techniques. Facilitated discussions, rapid & continual feedback and ownership of data – all help in building group consensus and aid in future change management. Limit upfront investment in systems or data. For example, FastTrack’ web‐based “The people who have been doingcontinuous improvement successfullyfor some time are the first toacknowledge the management team ofa company is not where theimprovement ideas come from; it’sfrom the operations side, where thecustomer value is being added, that themost effective ideas originate.”Industry Week, Apr 2008
tool is free, easy to learn and allows the project to get up and running quickly. Again, you don’t have to use the FastTrack process or tools for process improvement. However, I would encourage you to incorporate these six principles, along with the ideas in the ‘How to Fail/How to Succeed’ chart, into any continuous improvement project. Summary Master the Fundamentals Most sports coaches can agree on one thing – master and repeat the basic fundamentals if you want to succeed. Football has blocking and tackling. Baseball has pitching and defense. Golf pros maintain a steady head. Each sport has their own, with a common theme that most successful players and organizations are fundamentally sound. Vince Lombardi, the Wright Brothers, Jack Nicklaus, and countless others – all knew that mastering the fundamentals breeds success, and this takes both practice and a game plan. We’ve hopefully provided you the fundamental principles for practicing successful continuous improvement. As for the game plan? We’ll end this article with the following four steps to consider when beginning any project: 1. Define the problem you’re trying to solve. Limit to one or two sentences AND identify how you’ll know if you’re successful. 2. Know your end point. Can you develop a single chart that shows your end product? 3. Keep it simple. You can always add complexity later as needed. 4. Produce quick wins. Nothing builds momentum like getting that first score. Good luck! Andrew Muras is Senior Manager of BAE Systems’ Systems Engineering Solutions and is responsible for developing and implementing performance management, knowledge management and business solutions for both industry and government organizations. He teaches various courses and workshops in performance measurement and process analysis techniques across North America. Mr. Muras has published a book, Process Improvement and Performance Management Made Simple, www.simpleprocessmgmt.com, and dozens of articles. He can be reached at: email@example.com Deborah Meyers is CFO for the Calgary Board of Education (CBE) where she implemented a continuous improvement program. Her past experience also includes CFO for Shared Services at the Province of British Columbia where she implemented a continuous improvement program using the above principles and FastTrack that is still operating over eight years later. Ms. Meyers has also run numerous successful consulting practices. She can be reached at: firstname.lastname@example.org.